If you’re thinking about taking the plunge into home ownership, know this: it’s probably going to cost more than you think.
There are a number of costs associated with home-ownership that many first-time buyers tend to overlook. It’s more than just trading in rent for mortgage payments.
In addition to a down payment and monthly mortgage instalments; transfer taxes, carrying costs, closing costs, property taxes, utilities, lawyers, realtors and other miscellaneous expenses must all be accounted for.
It’s easy to see how the cost of purchasing a home is more than the price tag.
Toronto-based realtor Melanie Piche says she even tells clients to set aside a “maintenance fund” to factor into their monthly mortgage payments.
Before jumping in to the market, it’s a good idea to sit down with a professional. They can offer valuable insight about affording and operating a home.
“When I was buying my first property,” recalls realtor Brendan Powell, and realty brokerage partner with Piche. “I wish I had someone to walk me through it more.”
According to both Powell and Piche’, it’s still a great climate for first time buyers. They say in the past few months, this group has been responsible for about 50 per cent of their sales.
“First time buyers can save a lot of money that others simply can’t,” he says.
With government incentives like the Home Buyer’s Plan, First Time Homebuyers Tax Credit and Land Transfer tax refunds — plus the fact they don’t have to worry about selling a home — people wanting to get their feet wet in real estate have an advantage over their counterparts who already own.
But just because the conditions are attractive, Powell and Piche says there are plenty of issues new buyers haven’t considered. Plus, purchasing a home can be pretty intimidating. That’s where realtors like them can help.
“People have a lot of good questions they’re embarrassed to ask,” explains Piche. “But our job is to provide the information they need to know.”
Title insurance, says Powell, is something condo buyers don’t generally consider. After all, many building owners have taken out insurance on the building. However, explains Powell, that coverage does nothing to protect the private spaces between the hallways and the windows. It’s up to the unit owner to insure the contents of the living space — and not just the jewellery and plasma screen. Everything in it — including appliances — should be covered.
